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Dispute over alley holds up major development

On Behalf of | May 9, 2023 | Real Estate Law & Litigation

The devil in the details, as the saying goes, and that is abundantly clear in many real estate deals.

Recently, a major Northern California real estate development has been held up by a dispute over ownership of a short, dead-end alley.

The development and the dispute

According to news reports, developer Kilroy Realty is planning a major development on the former site of San Francisco’s Flower Mart. The flower market has been on the site for more than 60 years but is now moving to a less busy part of town. However, neighboring businesses — which include many small manufacturers and car repair shops — have expressed concern about how Kilroy’s proposed office complex will affect their businesses.

More than a dozen of these businesses joined forces to sue Kilroy, alleging that it fraudulently claimed it acquired some of the land involved.

At issue is a 550-foot, private, dead-end alley on the Flower Mart site. Although it is small, it is considered crucial to all involved parties. Kilroy plans to expand the alley, but the other businesses say it owns only part of it.

Records going back to the 1950s show that the Flower Mart owned half the alley while the other half was owned by 14 other buildings. Kilroy says it found some records that showed that at some point, the Flower Mart acquired more of the alley. Because Kilroy bought the Flower Mart’s land, it says it now has more than 50% ownership of the alley, giving it a controlling interest.

The other parties argue that Kilroy’s claims are based on a mere clerical error in real estate records from the 1980s.

Given the high costs of real estate in Northern California, tiny discrepancies in records can lead to multi-million-dollar real estate litigation..